Amazon fights the outbreak of the coronavirus on two fronts

outbreak of the coronavirus ESG proposals Amazon's top 10 biggest acquisitions everkirstyfields / Pixabay

Nearly 200 million people shop in Amazon’s online marketplace every single month. Today, the company allows its U.S.-based third-party retailers (“TPRs”) to sell products all over the world. Additionally, foreign-based TPRs are also allowed to sell products to American consumers through the site.

Given Amazon’s massive popularity and undeniable global reach, this single company may have a previously-unfathomable impact on the worldwide outbreak of the coronavirus, also known as COVID-19. To date, this impact has taken two forms: (1) price gouging by TPRs who sell disease-prevention products; and (2) the scare resulting from the recent positive coronavirus test from an Amazon employee in Seattle. This article explores these dilemmas in detail.

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What Is The Coronavirus?

If you’ve read a newspaper or turned on the television in the last couple of months, you’ve undoubtedly heard about the coronavirus. Despite the rampant news coverage of the illness, many people still don’t truly understand what it is.

According to the Center for Disease Control, COVID-19 is a virus characterized by fever, cough, and shortness of breath. Although there is still much to be learned about how the disease is transmitted, experts currently believe that the virus is principally spread in one of two ways: (1) between people who come within six feet of one another; and (2) through “respiratory droplets” that are deposited when a person coughs or sneezes.

Perhaps most frighteningly when it comes to global retail, doctors also suspect that “a person can get COVID-19 by touching a surface or object that has the virus on it and then touching their own mouth, nose, or possibly their eyes.” This is particularly scary given that COVID-19 has a current mortality rate of 3.4%.

Shockingly, the virus has already been confirmed in nearly 85 countries worldwide and the total death count seems to be on the rise daily.

The outbreak of the coronavirus And Amazon -- A Two-headed Monster

As noted above, the outbreak of a disease like COVID-19 is particularly challenging in today’s global economy. This is especially true when companies like Amazon have airplanes and products flying all over the world 24 hours a day, seven days a week. So far, Amazon’s involvement has been noted in two principle manners, discussed separately below.

#1: Price gouging

Sadly, tragedy often brings out the worst in human beings. We’ve seen this previously when products like bottled water and building materials are sold at sky-high prices following a devastating hurricane. The current outbreak of the coronavirus is no different.

Our firm first noticed the price gouging trend on Amazon when we searched for disease prevention devices (like surgical masks) on Amazon. What we noticed was later confirmed by national news sources -- TPRs operating in sites like Amazon, Walmart.com, and Etsy were jacking up prices on everything from hand sanitizers to so-called coronavirus “survival kits.”

For its part, Amazon does not condone this sort of price gouging (nor, presumably, do Walmart or Etsy). Nonetheless, given that Amazon currently has more than 300,000 TPRs operating on its site alone, the company is finding it nearly impossible to police all of its bad actors. Meanwhile, consumers who are just trying to protect themselves and their families from COVID-19 are being asked to pay upwards of $800 for a case of simple hand sanitizer.

#2: Employee illness and possible transmission

Scarier yet is the fact that one of the confirmed cases of coronavirus was found in a person employed at Amazon’s Seattle headquarters. Even though that person is now under quarantine, authorities are unsure how many other employees may have been exposed to the virus prior to the confirmed medical tests.

Given that scientists suspect COVID-19 may be transmitted when a healthy person touches a surface that has the virus on it, something as simple as a sneezing distribution center worker could have the potential of infecting unsuspecting consumers all over the world. Fortunately, some of the current medical research suggests that the virus may not live on surfaces for more than a few hours. Consequently, it is possible that a package once containing viral cells could be benign by the time it is shipped and delivered to consumers.

At this stage in the game, however, there is simply too much that remains unknown about how and why this disease is spreading so far, wide, and fast. It’s certainly possible that global retail may be playing a role in the outbreak of the coronavirus.

Can Consumers Protect Themselves From Amazon’s Coronavirus Problems?

The good news is, it appears that some good, old-fashioned common sense precautions may drastically lessen the impact that global retailers like Amazon may have on the spread of COVID-19. Those precautions include:

  • Price shopping for products like hand sanitizers, face masks, flu medicines, etc., to make sure you’re not getting ripped off by a TPR engaged in price gouging.
  • If you do come across a price-gouging TPR, take the time to report them to Amazon or any other online marketplace you may be dealing with -- you may just save another consumer from getting scammed.
  • Wiping down all packages received from online retailers with a household cleaning spray before and after you open them.
  • Wearing surgical gloves while opening packages and refraining from touching your face until you’ve properly disposed of the gloves.
  • Washing your hands for at least 20 seconds after touching any package delivered to your door (singing “Happy Birthday” two times through while washing usually provides sufficient time).

What Can Brands Selling On Amazon Do To Protect Themselves?

Consumers are not the only ones being hurt by the coronavirus problems in online marketplaces. Brands that sell in those venues are also facing new dilemmas. For example, some legitimate sellers are finding that their entire inventory of disease-prevention goods are being gobbled up by single purchasers. Some worry that these buyers may be making these purchases only to turn around and sell the same products to consumers at falsely-inflated prices.

To protect themselves in online marketplaces, brands are advised to take their own precautions, such as:

  • Monitoring their SKUs, ASINs, and best-selling products to ensure that they are not impacted by Rogue or Counterfeit Sellers.
  • Familiarizing themselves with Amazon’s product guidelines concerning the the outbreak of the coronavirus to ensure they do not get banned from sales.

It’s too early to tell whether the coronavirus will become the global pandemic that many people fear. Nonetheless, consumers, retailers, and manufacturers alike would be wise to study the impact global online marketplaces may have on the worldwide spread of disease. In the meantime, simple precautions should go a long way toward keeping everyone safe.

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About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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